The U.S. stock market (Dow) plunged Friday on the renewed concern of Trump’s China trade/cold war amid allegation of mishandling of ‘Wuhan’ virus (COVID-19). The risk-trade stumbled from COVID-19 magic therapy (Remdesivir) high as Trump warned he may re-impose tariffs on China for its ‘incompetence/negligence’ in dealing with ‘Wuhan’ Virus and causing a global pandemic.

On late Thursday Trump was in a presser with the NJ Governor Murphy:

Trump was asked about the White House Economic advisor Hassett’s horrible unemployment rate projection of 19% and his plan to bring the U.S. economy from the corona recession.Trump acknowledged Q2 will be a big flop; Q3 will be a transition period, but he is confident Q4 and next year (2021) will see a ‘V’-shaped recovery because of so much pent up demand. Trump basically blamed China for the global corona recession including the U.S.:

Well, I think we’re going to have a great third quarter. That’s going to be a transition. So when I say “great,” I think the transition is going to be really terrific. And we’re going to take it into the fourth, and I think we’re going to have, potentially, a great fourth quarter. There’s tremendous pent-up demand. I don’t know if Kevin said that or Larry Kudlow. But they’re telling — they see it. But I feel it. I feel it. I think sometimes what I feel is better than what I think, unfortunately, or fortunately, Phil.

But I tell you what: I feel it. And I will say that I think next year is going to be a spectacular year in terms of growth, in terms of bringing our country back. I think we’re going to have a really good year. We want to be where we were. And I think we can actually surpass where we were. And we were the strongest anywhere in the world. We were the best that we ever were, but we were the strongest anywhere in the world.

But I view what we have now as obviously a period of — here we are; it is what it is. We just got hit by a vicious virus that should have never been allowed to escape China.They should have stopped it at the source. They didn’t do that. A hundred and eighty-four countries have been devastated by it, including China, by the way. Because I looked at their numbers, and their numbers are terrible. And it’s just a very tough situation for the people of our country. All the loss, death, it’s a terrible thing.

But I think we’re going to make a very strong comeback. It’ll start in the third quarter. I think you’re going to see some — some pretty good numbers. I think you’re going to see really good transition numbers. But the fourth quarter is going to be — I really believe it’s going to be terrific. And I think that next year is going to be a great year.

Trump was asked whether he thinks his handling of the coronavirus crisis was appropriate and the U.S. public will vote for him in the Nov election- Trump said he is confident that all the U.S. States as-well-as public will support his COVID-19 handlings because of his prompt action on Ventilators, masks and COVID-19 testing including the latest rapid anti-body test:

Sure, I think they do. I think they have to do a number of things. They do have to do that. And maybe Phil could speak to that because I think I’ve handled it — and not me; I think our whole group has been spectacular. We had ventilators; we didn’t have any. We built them. We have thousands — tens of thousands are right now under construction. And we’ve given — as Phil said, you got, I think, more ventilators than anybody in the United States.

And there was never a person that needed a ventilator that didn’t get one in any state. Not one person that needed a ventilator. So we didn’t say, “He didn’t get a ventilator and somebody passed away. Somebody didn’t make it.” Now we had a mask problem. Now we have so many masks, we don’t know what to do with them. We had a big problem.

And you have to understand: When we took over, the cupboards were bare. And the thing that — frankly, it’s not as tough as the ventilator situation-- We’re the king of ventilators. But what we have done is — on testing, we’re doing numbers the likes of which nobody has ever seen before. And I told you, the President of South Korea, President Moon, called me to congratulate me on testing. And we did more tests than any other country anywhere in the world. And I think they told me yesterday a number — if you add up the rest of the world, we’ve done more testing. And it’s a higher quality test. So I think we’ve done a — I think the whole team, the federal government — we built hospitals for you and others.

We built medical centers. And I’m talking about thousands and thousands of beds---Many, many medical centers. We had — as you know, we had the governor of Florida and the governor of Louisiana over the last two days. They could not have been — and one was a Democrat, and this gentleman happens to be a proud Democrat. They could not have been more supportive of the effort of the federal government.

And I’ll tell you, Jim —Let me just tell you, we have — we started off with empty cupboards. The last administration left us nothing. We started off with bad, broken tests and obsolete tests. What we’ve come up with, between the Abbott Laboratories, where you have the five-minute test. Did they test you today? That’s a brand — you know what? That’s a brand-new test. That didn’t exist eight weeks ago, and now it’s like the rage. Everybody wants that test. No, I think we’ve done — I think we’ve done a really great job.

We had a broken — Jim, we had broken tests. We had tests that were obsolete. We had tests that didn’t take care of people (despite in the Obama era, there was no COVID-19). But here’s what’s very important: If you take a look at the swine flu, H1N1 — or, as Joe Biden would say, N1H1, but it’s actually wrong. He didn’t even know the name, okay? H1N1, the swine flu — the Obama administration was a disaster. And they did polling on how did they do, and their polls were so negative, so bad. They did a very poor job.

And they did a poor job on a lot of things. They did a poor job in our military. They did a poor job on our ammunition. When I got here, we had no ammunition. Just like we had no ammunition, we had very little medical, too. So I think, when you ask how did we do — and I have to say it because the news is so fake and so corrupt — I think we did a spectacular job. I’m not even referring to me. I’m referring to all of these people, including your people who have been working with my people so closely.

But the federal government has done a spectacular job, to a point where we’re building, now — we’re going to have thousands and thousands of ventilators, and we’re helping other countries. Because Phil doesn’t need ventilators--- You needed them very badly at the beginning.

On his ‘secret’ vaccine (COVID-19) development project (Wrap Speed) and whether he over-promised by assuring 300M doses of vaccines in 8-months- Trump said he is optimistic that due to the joint efforts between Oxford Vaccine, J&J and various other companies/ government agencies including the U.S. NIH, an effective vaccine will be developed in the coming days:

No, I’m not over-promising. I don’t know who said it, but whatever the maximum is, whatever you can humanly do, we’re going to have. And we hope we’re going to come up with a good vaccine. Johnson & Johnson and Oxford and lots of different great companies, representatives of our country in some time- — in some ways-- NIH is working very hard and doing a terrific job. No, I hope we’re going to have a vaccine, and we’re going to fast-track it as you’ve never seen before if we come up with a vaccine. I think they probably will.

We have — you know who is in charge of it? Honestly? I am. I’ll tell you, I’m really in charge of it (Vaccine development project). I could say somebody else. I will say, we’re dealing with, as you know, the General and the Admiral. They’re very much in charge. But I think probably, more than anything, I’m in charge. And I’m the one that gets blamed. And I get blamed anyway.

Don’t forget, if we come up with a vaccine in record time, they’ll say I should have done it faster.But we have a lot of good — a lot of good possibilities. Like the Gilead yesterday, that was a big thing. That was a big thing. And as explained — and I think very importantly, that was a step. You know, that was a big step: 31 percent step. But the step means, I guess, Deborah — what Tony, yesterday, was explaining — the step means you now take another step, another. All of a sudden, you’re up to 50, 60, 70. But that was a very positive — that was a big step, as I understand it. Okay? Thank you.

On Thursday, the U.S. intelligence agencies said that they agree with the scientific community, that the virus did originate in China but was not manmade and was not genetically modified. Trump was asked whether he agrees with the report-Trump virtually said it may be a fake report and he had not seen it, but intelligence chiefs made a non-specific (not so serious) briefing in January

Well, I haven’t seen the report yet, but I will tell you, if you speak to the head of intelligence right now, you speak to the head, and they did say that I was given a briefing when I said I was given it, not before.And they also said that it wasn’t specific and it was not a panic briefing. It wasn’t like, “Oh, we’re going to be invaded.” It was in January, later January —And I think — I think what you’ll do is you’ll speak to them. In fact, I’ll ask Mark to make a report to you because — the news was total — you know, as usual, fake and corrupt.So intelligence is doing a report, and the report turned out to be exactly as I said.

Trump then again denied that he received a general warning briefing from his intelligence chiefs about the COVID-19 spread from China and changed his narrative:

No, I’m not saying it. No, no. I’m not----You didn’t hear me. I said intelligence is saying it. And they’re going to give a report —and it will make you very unhappy because it makes you so wrong---You, in particular.

Trump was asked if U.S. unemployment rate hits 20% in the coming days, when he would go for another pay check-Trump said he is quite optimistic there would be no requirement of another paycheck because the economic recovery post-COVID-19 will surprise everyone:

Well, we’re talking about that. I know a lot of people are talking about it. But we’ve given a lot of stimuli. And again, we think now it’s so great. I’m so happy that you’re opening up parks and things because that’s a big step for New Jersey because they were hit very hard.

I think that — I think you’re going to see something that’s going to surprise maybe the world. And, you know, we’re the leader of the world. We’re really the leader--In this case, the leader of the world. And we’ve done better. If you look at our deaths, if you look at mortality rates, if you look at the things, we’re — in fact, I’m going to get a chart because it’s maybe the most impressive thing — right? — how we’ve done. And that’s a tribute to the governors, and it’s a tribute to the federal government and all of us working together. But I would love you to get that, if you could---Because we’re right at the top — meaning top, in a positive way, of those charts.

I think you’re going to see economic numbers that are going to be fantastic. I believe it very strongly. And you’re going to start to see it with the transition period, which is number three. And quarter four, you’re going to have tremendous numbers--Tremendous numbers. And I think next year you’re going to really have tremendous numbers.

On Friday (1st May), Trump said:

So I’ll be going to Camp David for a working weekend. We’re going to be spending a lot of time with meetings and phone calls and some foreign leaders. So we look forward to that, and we’ll be back very soon. I guess we’re doing something pretty big on Sunday night at the Lincoln Memorial. That’ll be very nice. But we’ll be back soon and I think some of you will be traveling out around the area where I’m going. But we’ll be at Camp David for a working weekend.

On mystery about NK’ Kim who resurfaced to open a fertilizer plant (from his reported CABG, almost costing his life) - Trump said he is unwilling to discuss the issue but he may call Kim over the weekend:

Yeah, I rather not comment on it yet — Kim Jong Un. We’ll have something to say about it at the appropriate time---I don’t want to talk about it. But I may call him at the weekend—

On Brazilian President, Trump said:

I think he’s doing a very good job. He’s a great friend of mine. And the President is doing really well in Brazil. We’re very proud of him. Well, they have — they’ve been hit hard. Brazil has been hit very hard. But you have a President that’s doing a very good job.

On re-imposition of tariffs on China as a ‘punishment’ for ‘Wuhan’ virus-Trump clarified it’s certainly an option, but Trump’s body language was quite defensive:

So we’re going to see what happens. A lot of things are happening with respect to China. We’re not happy, obviously, with what happened. This is a bad situation---All over the world — 182 countries. But we’ll be having a lot to say about that. We — it’s certainly an option. It’s certainly an option-- John---- It’s certainly an option.

On the gradual reopening of the U.S. and comments about opening too fast and too much in some states, Trump said he didn’t like the opening of the spa, saloon and tattoo parlors at this stage, but he welcomed the safe and quick opening of the country/economy:

I didn’t say that, John. I said I didn’t like the particular place — a spa, a tattoo parlor. No, no, I think it’s wonderful. I want to see us open safely, but I didn’t like spas and tattoo parlors, and I wasn’t thrilled about that. But I did — I said nothing about Georgia, other than that. I like the opening of the state. They will be opening. They’re going to open safely and quickly, I hope because we have to get our country back.

On Monday, Dow edged up +0.11% and recovered almost +400 points from the session low after the U.S. Treasury announced a plan to borrow $3T in Q2, almost 5-times more than during 2008-09 GFC. As a pointer, the U.S. Treasury/government borrowed $1.28T (issuance of bonds) for the entire 2019. All these may be indicating that Trump admin/U.S. Congress may be preparing for more fiscal stimulus in the coming days so that the current spate of short term corona recession does not turn into a mid/long term depression. On the weekend, Trump also stated that the total corona fiscal stimulus could amount to as much as $6T; i.e. almost 30% of the GDP.

Dow also recovered on visible signs of COVID-19 curve plateauing in the U.S. as the number of daily cases dropped below the 3-day moving average and a gradual easing of global corona lockdown including the U.S. Oil, the indicator of global economic activity also jumped as the world is gradually reopening and learning how to live with the COVID-19; Americans are scrambling for sea beaches after a long time, enjoying the bright sun, helpful for the containment of the deadly coronavirus to some extent.

Oil was also boosted as producers (OPEC+/N-OPEC+) are now automatically cutting their output levels to adjust the huge supply glut (as per the free-market mechanism). Techs also helped the market for a smart recovery in the ‘new normal’ digital world (WFH, remote working and higher demand for streaming services).

Earlier, Dow Future was also off the early Mon Asian lows after a report that a leading Oxford scientist said its vaccine is making headway, could show efficacy by June (for the currently undergoing human trial), instead of an earlier projection of Sep.

On early Monday, Dow Future plunged as Trump may re-impose tariffs on China for its ‘incompetence/negligence’ in dealing with ‘Wuhan’ Virus and causing a global pandemic. Actually, Trump needs additional tariffs (revenue) to balance the surging U.S. fiscal deficit due to COVID-19 disruption.

Trump said:China would face tariffs as an ultimate punishment for misreporting about the coronavirus outbreak and if China does not buy U.S. goods, the U.S. will end the trade deal. I want universities and schools to open in September-- Gilead is pushing fast on coronavirus drug and I believe there will be a coronavirus vaccine by the end of the year.

There was also a report that suggested a new U.S. intelligence analysis said Chinese leaders intentionally concealed the severity of the coronavirus pandemic in order to stock up on critical medical supplies needed to fight it.

The U.S. Secretary of State Pompeo said:The Chinese communist party continues to block access to the western world, the world's best scientists, refusing to cooperate with world health experts, to figure out exactly what happened—this is unacceptable during an ongoing threat, an ongoing pandemic. And China has a history of infecting the world, while there is enormous evidence; coronavirus came from a Chinese lab.

Another report also said all 17 intelligence agencies agree that the lab was the source of the coronavirus because there is not yet a definitive smoking gun, but confidence is high among 70-75% of the agencies. Meanwhile, the WHO Chief Tedros said the world had enough time to intervene after Jan's warning.

Amid all these ‘wars of words’, Trump also virtually blamed U.S. intelligence agencies for late reporting of China’s ‘Wuhan’ virus and took credit of himself for banning China early despite no intelligence backing and huge objections from almost everyone:

Intelligence has just reported to me that I was correct and that they did NOT bring up the CoronaVirus subject matter until late into January, just prior to my banning China from the U.S. Also, they only spoke of the Virus in a very non-threatening, or matter of fact, manner... Fake News got it wrong again, as always, and tens of thousands of lives were saved by my EARLY BAN of China into our Country. The people that we’re allowed were heavily scrutinized and tested U.S. citizens, and as such, I welcome them with open arms!

Bottom line:

Actually, Trump needs additional tariffs (revenue) to balance the surging U.S. fiscal deficit due to COVID-19 disruption. And thus he is now scrambling for re-imposition of tariffs on China, which is actually an import duty, being paid by U.S. importers/consumers. Trump is now also busy playing anti-China cards ahead of the election (in line with the 2016 election campaign strategy) to shift focus from his own mishandling of COVID19 issues from the media and public. Thus, there may be a double whammy for the risk-trade in the coming days amid COVID-19 disruptions and Trump’s China trade/cold war rhetorics, if Trump really goes after China for a renewed trade/cold war rhetoric.

Technical Outlook: SPX-500, DJ-30, and NQ-100 (Futs):

Technically, whatever may be the narrative, SPX-500 now has to sustain over 2880 for a further rally to 2895*/2930-2950*/2985* and 3025/3050*-3090/3135*-3185/3225* in the near term (under bullish case scenario).

On the flip side, sustaining below 2870, SPX-500 may fall to 2845/2820*-2790/2770* and 2750/2715*-2690/2675 and further 2635*/2610-2540/2425* in the near term (under bear case scenario).

Technically, whatever may be the narrative, DJ-30 now has to sustain over 23750 for a further rally to 24350*/24500-24800*/25150 and 25400*/25750-25950/26300 and further 26400/26650*-27000/27100* in the near term (under bullish case scenario).

On the flip side, sustaining below 23700-23680, DJ-30 may fall to 23350*/23100-22800*/22600 and 22400*/22100-21800/21500* and further 21200/20700-20450*/20300 in the near term (under bear case scenario).

Technically, whatever may be the narrative, NQ-100 now has to sustain above 9000 for a further rally to 9100*/9225-9300/9355* and 9505/9675-9775/9850 in the near term (under bullish case scenario).

On the flip side, sustaining below 8975, NQ-100 may fall to 8900/8800-8740/8700* and 8600/8550-8500/8380* and further to 8300/8180-8070/7900* in the near term (under bear case scenario).

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